Tesla Motors and other manufacturers have set their sites on achieving lower lithium-ion battery costs through economies of scale, which should enable power storage systems for solar energy.

By Tesla's own estimates, a project to build a battery factory called the "Gigafactory" is expected to drive down the per-kilowatt cost of its own lithium-ion batteries by more than 30% in its first year of production. The factory is expected to open in 2017.

By 2020, Tesla believes its Gigafactory will produce more lithium-ion batteries in one year than were produced worldwide in 2013.

"We're planning to build a large scale factory that will allow us to achieve economies of scale and minimize costs through innovative manufacturing, reduction of logistics waste, optimization of co-located processes and reduced overhead," according to Tesla's blog earlier this year.

Liquid batteries with a 20-plus year lifespan

Tesla's not alone in pursuing a cheaper, more efficient battery. Start-up Ambri is developing a liquid metal battery that it claims is less expensive and longer-lasting than lithium-ion batteries; the Massachusetts-based company also has the backing of Bill Gates and Total S.A., a multinational energy company.

Kristin Brief, vice president of corporate development at Ambri, said the company is initially targeting the utility market, and next year plans to deploy five prototype systems with 35 kilowatt hours (kWh) of capacity to five customers to test.

"Following those successful pilots, we'll be ramping up a manufacturing facility to accommodate full-scale deliveries in late 2016 or early 2017," Brief said.

Ambri's cells are made of three components: a salt (electrolyte) which separates two metal layer electrodes. The cells operate at elevated temperature and, upon melting, the three layers self-segregate and float on top one of another due to their different densities and levels of immiscibility (they can't blend together, like oil and water), according to Ambri.

Ambri's prototype battery cores come in three sizes: a 6.4-kWh pack, a 200-kWh pack and a two mega-watt hour (mWh) storage system.

Ambri hasn't released information on pricing, but Brief said the company "feels very good" about where it expects prices to be compared with more common lithium-ion or lead-acid batteries.

The liquid batteries are also expected to last at least 20 years. Internal testing has shown that after more than 2,000 cycles (powering and draining), the batteries retain their same capacity.

"Our results are fantastic," Brief said. "Lithium-ion, lead-acid and other types of batteries do see degradation in performance over time, but you really don't see that in our technology."

Today, battery systems for solar and wind power are too expensive, according to Jonathan Fishman, an analyst with PTT Research. A battery backup system typically consists of vehicle-style batteries and costs as much as $400 per kWh, Fishman said.

As battery technology evolves, it could pave the way to cost effectively store both wind and solar-generated energy and connect into electrical power grids. The technology also could used by businesses and homes, which could virtually remain off the grid except in emergencies.

Mass production will drive down the price through economies of scale, Fishman said. A battery backup system for a house would be about the size of a refrigerator and would cost about $3,000.

"That's a good cost," he said. "That's something I could see happening in solar systems across systems."

Economies of scale

Tesla plans on producing an electric vehicle for the "mass market," called the Model 3 sedan, in about three years, leveraging its and other manufacturers' demand for lithium-ion batteries in the process.

But the availability of less expensive electrical storage could also fuel the growth of utility and business-grade solar farms, which act like a conventional power plant by feeding electricity to the grid, and providing power at night as well.

Even consumers could benefit from inexpensive batteries that could store the average 35 kilowatts of power needed each day for a home to operate lights, appliances and other needs.

Fishman said that without adequate reserve power storage, solar systems face an uphill adoption battle because of their inability to supply power when the sun is down or covered by inclement weather.

"With cost reductions from the Gigafactory& , we may see lower-cost batteries trickle down to the [solar power] storage industry and see storage devices through SolarCity start to offer energy storage systems alongside their solar systems. In that case, a house could potentially be 100% off the grid," Fishman said. SolarCity is one of the largest solar power companies in the U.S.

A complete solar system with battery backup will likely sell for about $1.30 per watt by 2020, according to Fishman.

Today, solar systems for homes or businesses sell for around $2.5 per watt. A typical house needs a 6 to 7 kilowatt solar system, meaning installation costs more than $15,000. In other countries, such as China, the systems sell for as little as $1.15 per watt.

Panasonic has signed a deal with Tesla Motors to help build the Gigafactory, which it hopes will produce half a million electric-vehicle batteries per year.

The overall cost of constructing a utility-scale solar project came down 56% from 2010 to 2014 and now stands at $1.85 per watt on average, according to GTM research.

A look at the average power purchase agreement (PPA) price shows an average electricity price of 8 cents per kWh, down almost 40% since 2010, according to GTM.

By comparison, coal-fired electricity costs about 5 cents per kWh, "so solar is not cost competitive yet," Fishman said. "But if trends continue, it will be cost competitive."

Solar will continue to be a hot topic as companies increasingly find ways to make power more efficient and the industry enters a rapid capacity expansion phase.

"Even by 2020 or 2030, I don't think we'll see a house not connected to the grid, but what will happen is the grid will become a backup system," Fishman said.

This story, "How Tesla will help bring renewable energy to your business or home" was originally published by
Computerworld.